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. Last Updated: 07/27/2016

Putin's Glass Half Empty or Half Full?

President Vladimir Putin is following in the footsteps of Peter the Great. Just as the great reformist tsar, the master of the Kremlin is opening a window on the West and is nudging his country toward necessary modernization. A task of titanic proportions still lies ahead: Like Sisyphus he will over and over again have to push the stones of opposition and society's ossification up the steep hill of reform.

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The key question is whether he can maintain this course when resistance and opposition mount. And this will inevitably happen as there remains a great deal to be done. If enterprises are to work efficiently and be competitive on world markets, it will be necessary to lay off millions of people. However, this is a socially explosive area which could knock Putin off his current pedestal of 70 percent popular support. Nonetheless, as the president clearly gave us to understand in his state of the nation speech last week, he is determined to proceed down the thorny path of reform, although it promises to be very painful at the outset -- with tangible improvements coming only later.

Unlike his predecessors Mikhail Gorbachev and Boris Yeltsin, Putin does not succumb to illusions of the possibility of some "third way," and is taking firm steps in the direction of a market-based economy. Furthermore, he is clearly making a wager on small and medium-size business, on the middle class, and on freedom instead of an overbearing state. And only this, at the end of the day, will be able to deliver results.

For Russia there cannot, and will not, be isolation. Putin understands this and has not been afraid to enter the fray.

The president is looking for a cure not based on switching on the Central Bank printing presses, but on a tough modernization program, battling bureaucracy and integrating Russia with the world economy.

Above all, Putin has halted the collapse of the state, which was a real possibility in the Yeltsin era when the first Russian president's declaration that the regions should "take as much sovereignty for themselves as they could swallow" looked like it could be taken to its logical conclusion. Whether the erosion of the state can be held in check in the long term or not depends very much on the ability of the Putin administration to demarcate competencies and achieve a fair distribution of tax revenues between the federal center and the regions -- such that the latter are not bled dry.

Putin has managed to break out of the vicious circle in which a few taxpayers are squeezed harder and harder by the state. Instead, the tax burden has been significantly reduced, but everyone is expected to pay their taxes.

The issue of whether this course can be sustained or not depends on whether Putin succeeds in pushing through structural reforms. This involves far-reaching de-bureaucratization, abolishing a number of state structures, reducing the state's excessive involvement in the economy, pushing through banking reform and liberalization of natural monopolies, and ensuring that laws are implemented.

BP Amoco's recent announcement vis-?-vis Sidanco and the stock market demonstrate the bankruptcy of the caviling foreign hacks who still try to cite Putin's past career in the KGB as evidence of his inability to conduct real reforms. The sharp upturn in the stock market and foreign companies' plans to make major investments tell a different story: that Putin's turn to the West and embrace of the market will be richly rewarded.

Those opposing necessary structural reforms are, among other places, to be found within the government's own ranks: The Cabinet has made each step down the path of reform only under massive pressure from Putin. The president would do well to consider replacing key figures in the government, which is proving such a drag, if it cannot be made to work for reform.

The president is on a historical mission and it is Russia's last chance: Either it must modernize or face ruin.

Mathias Brüggemann is Moscow bureau chief of Handelsblatt newspaper, where this comment first appeared.